Global stocks mixed amid worries over China, Italy

New York: An early rally on Wall Street fizzled Friday as global bourses finished mixed amid a range of worries that included Italy’s messy budget dispute with Brussels and slowing Chinese growth.

US stocks opened strongly following good earnings reports from Procter & Gamble, American Express and others, but the market lost steam at midday. All three major indices had slumped more than one percent on Thursday.

“In a week when developments seem more mixed than bearish, markets are struggling to stabilize from an early-October shock that began in Bonds and ended in Equities,” JPMorgan Chase said in a research note.

The analysts said earnings would be a positive catalyst for stocks over the next two or three weeks, but warned of a medium-term hit after the period of “peak” earnings growth ends.

The Nasdaq was the worst performing of the three major indices, ending down 0.5 percent at 7,449.03, following a session in which it swung more than 150 points.

The S&P 500 finished with a small loss, while the Dow edged higher.

In Europe, the Frankfurt and Paris bourses declined, while London rose as Italy’s fight with Brussels over its budget plan sparked worries about the eurozone.

On Thursday, the European Commission formally warned Italy that its budget plans for 2019 were a serious concern, demanding “clarifications” over Rome’s “unprecedented” deviation from EU rules.

Late Friday afternoon, Moody’s downgraded Italy’s debt rating by a notch, citing the “material weakening in Italy’s fiscal strength, with the government targeting higher budget deficits for the coming years,” as well as debt holding near the current 130 percent of GDP “rather than start trending down as previously expected.”

– Chinese growth slows –

Earlier Friday, Asian stock markets also traded mixed, with Shanghai bouncing back from early losses despite data showing Chinese economic growth slowed to its weakest level in nine years.

The world’s second largest economy expanded 6.5 percent year-on-year in the July-September quarter as a campaign to tackle mounting debt took its toll — along with trade frictions with the US.

It marked the worst performance since the start of 2009

Shanghai equities nevertheless finished the week with a rally after a rare joint intervention by some of China’s top financial officials.

However the pronounced slowdown weighed on markets elsewhere because China is a crucial driver of global economic growth.

“The Chinese economy is slowing — but that’s down to a deleveraging process and concerns about trade and a global slowdown, as interest rates rise,” CMC Markets analyst Michael Hewson said.

– Key figures around 2100 GMT –

New York – Dow Jones: UP 0.3 percent at 25,444.34 (close)

New York – S&P 500: DOWN less than 0.1 percent at 2,767,78 (close)

New York – Nasdaq Composite Index: DOWN 0.5 percent at 7,449.03 (close)

London – FTSE 100: UP 0.3 percent at 7,049.80 (close)

Frankfurt – DAX 30: DOWN 0.3 percent at 11,553.83 (close)

Paris – CAC 40: DOWN 0.6 percent at 5,084.66 (close)

Milan – FTSE MIB: FLAT at 19,080.16 (close)

EURO STOXX 50: FLAT at 3,210.82 (close)

Tokyo – Nikkei 225: DOWN 0.6 percent at 22,532.08 (close)

Hong Kong – Hang Seng: UP 0.4 percent at 25,561.40 (close)

Shanghai – Composite: UP 2.6 percent at 2,550.47 (close)

Euro/dollar: UP at $1.1511 from $1.1453 at 2100 GMT

Pound/dollar: UP at $1.3066 from $1.3018

Dollar/yen: UP at 112.50 from 112.21 yen

Oil – Brent Crude: UP 49 cents at $79.78 per barrel

Oil – West Texas Intermediate: UP 47 cents at $69.12 per barrel